SLDBs oversubscribed by more than four times

The Sri Lanka Development Bonds (SLDB) issued by the Central Bank (CB) has been oversubscribed by more than four times over with bids amounting to US$ 215.25 million being received after the bids closed on March 9.

The CB offered SLDBs in the amount of US$ 50 million for a two year maturity period for eligible investors. This was the first SLDB issue in 2007 and is within the approved borrowing limit of parliament for 2007. They include foreign citizens, non resident Sri Lankans, Sri Lankan dual citizens, specified companies with agreements with the Board of Investment (BOI) and specified insurance companies.

"The eligible investors' response to the issue is very encouraging and clearly reflects the investors' confidence and their preference to lock their funds in guilt edged Dollar Bonds issued by the Government of Sri Lanka," said the Bank’s Superintendent of Public Debt C. Premaratne adding that these 'bonds are allowed to be purchased by foreign citizens and Sri Lankans working abroad' but that the breakdown in the proportion of foreign and local investors has not yet been compiled.

"So far, we have issued $580 million in total of SLDB's in 2006 and from March 9, we had an auction for $50 million," DBS Dayawansa, Deputy Superintendent of Public Debt told The Sunday Times FT. "From the auction, we accepted US$ 215.25 million with the value (settlement) date on 16 March 2007."

The offer was opened for subscription at a rate of 6 month London Inter Bank Offered Rate (LIBOR) plus a margin determined through competitive bidding. According to the CB, the government decided to accept all bids received, US$ 215.25 million of two years SLDB's at a rate of 6 month LIBOR plus 155.2407 basis points (weighted average) as the offer was heavily oversubscribed at reasonable lower margins.

The bonds are transferable by endorsement, delivery and registration with the Superintendent of the Public Debt of the CB. Premaratne also said that SLDB bonds for this coming year will be issued depending on the cash flow requirements and will be decided by the Treasury Department.

Foreign investment in TBs over Rs 10 billion
Foreign investment in Treasury bonds issued by the government has ‘shown a remarkable progress’ exceeding the total investment which now stands at over 50 per cent of the annual target of Rs 20 billion in 2007, the Central Bank said.

It said in response to government’s invitation to foreign investors to invest up to 5% of the outstanding Treasury bonds, foreign commercial banks have already arranged total investments amounts to Rs 10.7 billion by March 14, 2007. The main contributors are the overseas clients of Citibank N.A (Rs 5,850 million), Deutsche Bank (Rs 4,320 million) and HSBC (Rs 580 million). Of this total, investment made through the primary market amounted to Rs 9,140 million and the balance of Rs 1,630 million was invested via the secondary market, the Bank said.